ING tightens its energy policy, Dominican Republic

Wednesday, April 10, 2019

FFG The Netherlands

The problem

The construction of the Punta Catalina coal-fired power station in the Dominican Republic has been met with years of protest by the local population and community organizations. The plant poses a substantial climate threat and has become one of the main focal points of the multi-country corruption affair involving the Brazilian construction company, Odebrecht. Following a trial in a US court at the end of 2016, it was revealed that Odebrecht had paid over $92m in bribes to Dominican officials to secure a number of contracts, including for the construction of the plant.[1] The Dominican people refused to accept this type of misconduct, showing their discontent in the ‘March Verde’ (Green March), one of the largest demonstrations on corruption in decades.[2]

Research by the FFGI in November 2015 showed that from 2009–2014, ING invested eight times more in fossil energy companies than in sustainable energy companies – with 89% of its loans going to the fossil energy sector.[3] In total, during this period ING financed $24.5bn in fossil energy companies and energy generation, including coal companies. In contrast, its finance to renewable energy companies in the same period amounted to only $2.9bn.

Influencing activities

Given the controversy surrounding the Punta Catalina project, along with pressure on ING to divest from another power-plant project in Cirebon, Indonesia, ING’s investment policies became the subject of questions in the Dutch Parliament, when critical questions were asked at the end of 2017 about ING’s financing of the Punta Catalina power plant. After much public pressure and engagement with FFG NL, in August 2018, the bank finally decided to sell its stake in the Punta Catalina plant, demonstrating compliance with its recently tightened coal policy (see below).

Peter Ras, FFG NL project manager, said: ‘ING’s decision not to grant any further funding to the new coal-fired power station in the Dominican Republic is good news. The Fair Finance Guide finds it very important that banks stop all investments in coal companies and reduce their financing for fossil energy companies in favour of financing sustainable energy.’[4]

Change in financial institutions

In December 2017, ING implemented a significant tightening of its coal policy: the bank says it will only grant loans to new customers in the energy sector if they are dependent on coal for less than 10% of the energy generated.

In June 2018, 15 banks and insurers published the ‘Spitsbergen Ambition’, in which financial institutions promise to measure and publish the climate impact of all their investments and financing by 2020, for example on the basis of Platform Carbon Accounting Financials (PCAF). In addition, the 15 signatories promise to set so-called ‘science-based targets’ to ensure that their financing and investment policy meets the objectives of the Paris Agreement on climate change. The Fair Finance Guide has for years been calling on banks and insurers to publish funded greenhouse gas emissions and to reduce them in a way that can be measured.

In July 2018, ING sold its stake in the Punta Catalina coal-fired power plant. With this decision, the bank gave further substance to the tightening of its coal policy in December 2017. It is clear that ING has listened to the years of calls from CSOs worldwide to stop this investment.

Change in companies invested in

Although ING withdrew its funding from the plant, and despite masses of protests around Latin America, the construction of the Punta Catalina power has continued. While this is disappointing, the campaign against it was beneficial for mobilizing people and raising public awareness of the corruption in Odebrecht; it has placed the construction company under close scrutiny and pressured its investors to rethink their decisions, since their connection to Odebrecht put their own reputation at stake. In July 2018, Odebrecht signed a Letter of Commitment to the Business Movement for Integrity and Transparency, demonstrating willingness to improve its practices.[5]

Impact on the ground

Although the construction of the plant has continued, the decision of ING to divest from the plant illustrates increased willingness of banks to avoid investing in controversial mining. It is proof that shining a light on the issues can create enough pressure and political will to create policy change. While the people affected by the Punta Catalina plant may be yet to feel any benefits, it is hoped that this gradual shift in policy and investment will spare other communities from the impact of such harmful investments.